The Matthews China Fund (Trades, Portfolio) boosted its stake in Chongqing Changan Automobile (SZSE:200625) by 62.13%, adding 3,738,629 shares of the company at an average price of 11.85 Hong Kong dollars ($1.53) in the second quarter.
The firm now owns 9,756,224 company shares.
Chongqing Changan is a Chinese automobile manufacturer that was founded in 1862. It is headquartered in Chongqing, China, and is one of China’s largest automakers by production volume. The company creates cost-efficient vehicles, removing nonessential features, which keeps its prices low. Chongqing Changan produces and manufactures passenger vehicles, commercial vehicles and light vehicles.
Chongqing Changan has a market cap of 57.73 billion Hong Kong dollars, an enterprise value of 61.61 billion Hong Kong dollars, a price-earnings (P/E) ratio of 7.40, and a price-book (P/B) ratio of 2.03.
According to GuruFocus Chongqing Changan has a 3.5-star predictability rating based on backtesting results; stocks with a 3.5-star predictability rating produce, on average, a 9.3% yearly return over a 10-year sample size. In the previous year the company’s stock price has risen an estimated 26%.
Chongqing Changan has reported excellent growth in its financials over the last five years which likely had an impact on the Matthews China Fund (Trades, Portfolio)’s decision to add to its stake. Over the last five years the company has reported operating income growth of 55.10%, EPS without NRI growth of 52.60%, EBITDA growth of 47.10%, book value growth of 22.90% and revenue growth of 16.60%.
Chongqing Changan is one of China’s leading automobile manufacturers with more than 100 years of operating experience. The company has a differentiation advantage of manufacturing low-cost vehicles, and it has reported strong financial numbers. All of these factors likely influenced the Matthews China Fund (Trades, Portfolio) to add to its stake.
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Disclosure:Â Author does not own any shares in this company.
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